Improving Infrastructure Financing in Brazil

Brazil is shifting its infrastructure financing model away from heavy reliance on concessional BNDES lending toward a balanced approach that mobilizes private capital. The report identifies a significant investment gap, estimating a need for approximately R$205 billion annually between 2019 and 2024, or about 3.2% of GDP. To bridge this, the authors propose mitigating currency and construction risks, recycling BNDES assets, and reducing the restrictive impact of Basel III capital requirements on commercial banks. Key suggestions include offering power purchase agreements in US dollars for renewables and transmission lines, standardizing EPC contracts, and expanding the use of infrastructure debentures to attract institutional and foreign investors.

• Brazil's infrastructure investment as a percentage of GDP is approximately 2%, which is significantly lower than in China (near 7%) and India (5.5%), hindering the country's growth potential.
• Between 2019 and 2024, Brazil's infrastructure needs are conservatively estimated at 3.2% of GDP, totaling approximately R$205 billion in annual investment, with over half expected to come from private domestic sources.
• The BNDES must transition from being a primary financier to a catalyst that 'crowds in' other investors by mitigating risks, particularly in sectors like railways, urban mobility, water, sanitation, and social projects.
• To attract foreign finance, the report recommends mitigating currency risk by allowing power purchase agreements (PPAs) in US dollars for renewables and transmission lines, capped at 10% of total sector revenues.
• Construction risks can be mitigated by standardizing engineering, procurement and construction (EPC) contracts, potentially using FIDIC rulings, and developing 'Mini-Perm' loans that allow commercial banks to execute a PUT option against another lender after project completion.
• The implementation of Basel III regulations has reduced the capacity of Brazilian commercial banks to finance large projects due to higher capital requirements for long-term project finance and maximum credit exposure limits to economic groups.
• To broaden the investor base for infrastructure debentures, the report suggests shifting tax benefits from the investor to the issuer and extending tax exemptions to bonds denominated in Brazilian reals issued abroad.

APA

World Economic Forum (2019). Improving Infrastructure Financing in Brazil. http://www3.weforum.org/docs/WEF_Brazil_Infrastructure_financing_study_Report_2019.pdf

Chicago

World Economic Forum. Improving Infrastructure Financing in Brazil. 2019. http://www3.weforum.org/docs/WEF_Brazil_Infrastructure_financing_study_Report_2019.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Improving Infrastructure Financing in Brazil |date=January 2019 |url=http://www3.weforum.org/docs/WEF_Brazil_Infrastructure_financing_study_Report_2019.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2019improving, author = {{World Economic Forum}}, title = {{Improving Infrastructure Financing in Brazil}}, institution = {World Economic Forum}, year = {2019}, month = jan, url = {http://www3.weforum.org/docs/WEF_Brazil_Infrastructure_financing_study_Report_2019.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }